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Lifestyle and money

26th January 2022 · 6 minute read

Published by The Real Debt Guy

  • Budgeting
  • Luxury lifestyle
  • Debt & lifestyle

What's the Difference Between Necessities and Luxuries

Luxury vs Necessity – How to spot the difference

In today’s society there, seems to be a common misunderstanding between what is seen as a luxury and what is a necessity. It’s this confusion that is adding to the growing number of people in debt. If you’re struggling with debt, and you’re looking for ways to take back control of your spending and finances, being able to spot the luxuries is a great place to start.

So, let’s start by taking a look at what exactly a luxury and a necessity is.

Not in the mood to read? We got you covered. Listen to the rest with the YouTube link at the bottom of the page.

What is a Necessity vs a Luxury?

To put it simply, a necessity is an essential need. It’s an indispensable item or service that you can’t live without.  Whereas a luxury on the other hand, is a ‘nice to have’, it’s not crucial. The problem is that people think they can’t live without certain items, or certain things. But they can.

The real necessities in life are things like food, water, clothing and shelter. You might think money is a necessity, but the truth is, it really isn’t. Money is a tool, nothing else. It allows you to obtain the necessities you need. You exchange it for something you can use.  The money itself is useless if it does not allow you to do that.

Challenge yourself to see real Necessities

If you really challenge yourself to look at your own spending, it’s guaranteed there will be some items or expenditure, where you are torn about where to put it. If you have to think, then these will be luxury every time.

Let’s take a look at three items that are often confused as a necessity.

Mobile phone

Is it a necessity, or is it a luxury? It’s a luxury! How do we know that? Because, people have survived for centuries without mobile phones, and still do. The first mobile phone wasn’t even invented until 1973. Now it’s rare not to see someone with a mobile phone. The problem here is, that it is now considered normal to have a monthly mobile phone contract and an iPhone worth £600 plus.

People with almost nothing to their name, will even skimp on real necessities like food to make sure they have a mobile phone. They have become a false essential item, a ‘necessity’ (not really) to stay connected. That's marketing for you.

The funny thing is we couldn’t be more disconnected. Constantly glued to mobile phone screens, instead of connecting with the people in front of us. Take the mobile phone away, you can still communicate with people


Is it a necessity, or is it a luxury? This one isn’t as black and white. By itself, a car is definitely a luxury.  However, if it is the only way to obtain a necessity, then you could say it is ‘a necessary means to a necessity’...without it, you may be in trouble.

You might really need a car, but do you really need a brand spanking new BMW? The minute you’re looking at taking out car finance, that car becomes a luxury. It’s something you cannot afford without the help of finance.

The costs of taking on car finance, and actually running a car can be significant, and can seriously eat into your income. Even when it comes to a car being ‘a necessary means to necessity’, it's still a very thin line between necessity and straight up luxury.

Alcohol and cigarettes

Is it a necessity, or is it a luxury? 100% a luxury! Neither one is essential for survival, in fact they are detrimental to your health. People who don’t smoke 20 cigarettes a day, or drink every night, will more than likely be in better health than those who do. These items are pretty much the opposite of a necessity!

If you are addicted to alcohol or cigarettes, you can seek free help and support from your doctor who can refer you on.

The above are just three examples of commonly misjudged luxuries that people claim they cannot live without, but the list goes on.

Need not want

Businesses today are incredibly skilled at making you believe that a luxury item is a necessity. They influence you from something being a want (a luxury), to a need (a necessity).

Take the internet for example. The internet has only been around since the early eighties. Yet today, the minute the internet ‘goes down’ we go into a blind panic! How will I order my Deliveroo?! Gone are the days of picking up the phone, ordering your Chinese food and walking to collect it! We’ve all become so accustomed to having anything we want at our finger tips, we’ve been conditioned to feel it’s something we literally need to survive.

Think about how many times you’ve heard someone say: ‘I need a new washing machine, mine is broken’, ‘I need a new TV, mine is old’, ‘I need a new phone, mine has been playing up’. The key word here is need, not want. The truth is none of these are essential to survival. However, they are seen as a social norm that make life easier, or a source of entertainment. They are a want that people have become so dependent on, they genuinely feel like they need them.

Don't forget to read The Real Debt Guy's final thoughts below!

The information in this article is considered to be true and correct at the date of publication.

The Real Debt Guy's final thoughts.

If you are serious about cutting back on your luxury expenditure, really challenge yourself on what you actually need, not what you want. If you can survive without the things you have identified as ‘a need’, they are in fact a want. These things may improve your life but they’re not essential for your survival.

A simple rule to follow is to make sure any luxuries you buy are paid for by money earned with little or no effort e.g. passive income.

Let’s take investments as an example. If you want to have a super expensive luxury holiday every year, it’s much better to have rental property income that will cover the cost, rather than putting the holiday on a credit card. You’ll only have to work harder to pay it off, which takes away from the purpose of the holiday in the first place.

If you find you are working yourself into the ground to afford the luxuries in your life, something has got to give. The truth is, having more and more luxuries will not necessarily make you happier, people with the most simple of lives are often the happiest.

Challenge yourself today, to see the real necessities in your life.

If you want to take control of your spending and finances, take a look at our Budget Planner to get a head start. You might also find it interesting to checkout the mindfulness section, to challenge the way you think about what you need and what you want.

Simplifying complicated matters.

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